Page 22 - BELRptOct18

6.0 Public Sector 6.1 Budget
Belarus' draft budget for the next year has been calculated using the US dollar annual average exchange rate of BNY2.2160 , according to the Belarusian Finance Ministry. The draft budget expects the GDP growth rate to reach 2.1% in 2019. The annual average inflation rate is expected at 5.3%, the refinancing rate at 10% per annum, and oil prices at $60 per barrel. The draft budget has been put together using the baseline economic development scenario. Its revenues have been calculated bearing in mind the new revision of the Tax Code and measures taken to consolidate the state budget revenues. In 2019 the tax burden will not exceed the figures specified by the five-year social and economic development plans. In 2019 revenues of the consolidated budget are expected to reach BNY36.6bn, 101.6% of the estimated revenues this year. Revenues of the central state budget are supposed to reach BNY23.5bn, 100.1%. The figures are determined by more conservative oil price expectations and taxation adjustments in the Russian oil industry.
The budget is almost in balance. Fitch's measure of general government balance (consolidated government including Social Protection Fund and off balance sheet expenditure related to guarantees and financial sector transfers) is estimated to have recorded a near-balanced position at -0.1% of GDP in 2017. This estimate incorporates a consolidated government surplus of 2.4% of GDP reflecting a combination of revenue growth derived from higher oil prices and a more dynamic economy and continued expenditure restraint.
Fitch expects the general government to record low deficits of 0.8% and 1.2% of GDP in 2018 and 2019, respectively, reflecting lower surpluses at the consolidated level plus potential cost related to the materialisation of guarantees, banking sector capitalisation and the asset clean-up process. We forecast the "augmented deficit", which includes off-budget programme lending - adding to government debt - to be a little higher at 1.8% of GDP in 2018.
Fitch estimates that government debt (including guarantees) rose to 55.7% of GDP at end-2017 , still below the 'B' median. Belarus's debt is highly exposed to currency volatility (90% is FC-denominated), and interest rate risk (50% floating rate). Fitch includes government guarantees, estimated at 10.1% of GDP, in its total debt calculations, due to the high likelihood that the government will need to meet state-owned enterprises' repayment obligations.
22 BELARUS Country Report October 2018 www.intellinews.com